ING Class Action and 401k Fees
There is a 401(k) class action suit against ING for allegedly hiding kickbacks they received from fund firms in 12(b)-1 fees. The suit further alleges that the insurance group ran a pay-to-be-on-the-platform scheme for their 401(k) programs. The article states
“The plan administrator claims that ING received kickbacks from the featured mutual funds in the form of 12(b)-1 fees, service fees and other revenue-sharing payments, which not only raised the funds’ costs but also put the insurer in violation of its fiduciary duty to plan clients.” Read the full InvestmentNews Article here.
Who’s To Blame?
Some of the blame may be placed on the plan administrator for not doing their due diligence. The trend of plan sponsors and fiduciaries being sued by participants has increased at a rapid pace.
In 2007 you had the case of Hecker vs. Deere. In this suit, participants charged Deere violated its fiduciary duty by providing investment options that charged excessive fees and failed to adequately disclose the fee structure to participants.
“Is there anything additional I could be doing to improve my firm’s 401k plan?”
Wal-mart was also sued by their participants in 2008, a suit which has gained the support of the DOL and still awaiting the outcome. And most recently the case against Caterpillar which agreed to pay $16.5 million to settle allegations including charges that the company violated its fiduciary duty by offering investment options with “excessive management and other fees’ and concealed administration costs for four 401k plans.
ERISA litigation has increased by 23% over the past four years. All plans regardless of size may face the same fate if they ignore their fiduciary responsibility.
How Can I Protect Myself?
Though ING denies the charges, the fact that a suit is being brought against them should raise eyebrows and make any plan sponsor begin to ask themselves “Is there anything additional I could be doing to improve my firm’s 401k plan?”
As a business owner, plan sponsor or trustee, do you know if your employee’s are paying excessive fees that may have been avoided? It’s unfortunate, but many retirees are finding that they just don’t have enough to sustain their standard of living and many have even returned to work or postponed retirement all together. Remember, the liabilities associated with hidden fees, poor plan design and conflicts of interests can be quite costly and leave you, as the plan sponsor, exposed to court cases, complaints and grievances.
If you’d like more information on ways to reduce your fiduciary exposure while enhancing your participants overall investment experience contact us for a free evaluation of your 401(k) fees.
Or Download our 401k Fee Disclosure Kit:
About Charles Massimo
Recognized as industry expert and guest speaker at national industry conferences, Charles Massimo is a published author and media subject expert on topics ranging from wealth/asset management to investment and financial planning for high net worth families.